USA/Africa: Economic Policy, 2

Africa Policy E-Journal

USA/Africa: Economic Policy, 2
Date distributed (ymd): 011029
APIC Document

Africa Policy Electronic Distribution List: an information service provided by AFRICA ACTION (incorporating the Africa Policy Information Center, The Africa Fund, and the American Committee on Africa). Find more information for action for Africa at http://www.africapolicy.org

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Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+

SUMMARY CONTENTS:

A statement (distributed in a separate posting) was released today by Africa Action,Oxfam America, and ActionAidUSA, at a briefing for the international and White House press corps on the occasion of the first U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum. The statement highlights four broad policy changes needed for U.S. policy on economic relations with Africa, in the areas of debt, international trade negotiations, development assistance, and U.S./African trade in particular. The groups argue that the present approach, focused on the African Growth and Opportunity Act (AGOA), is too narrowly limited to trade and unhelpful to promotion of sustainable development of African countries.

This posting contains selected web links for more information on the issues discussed in the statement, as well as excerpts from a March 2001 U.S.-African Trade Profile with statistics on U.S. trade with sub-Saharan Africa. Despite AGOA, the data make clear, U.S. imports from Africa are still highly concentrated on a narrow range of products (oil and strategic minerals) and a small number of countries.

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Selected Web Links for Background Information on issues raised in October 29 statement by Africa Action, Oxfam America, and ActionAidUSA

Note: This is not intended to be a comprehensive list, but a short list of what we recommend as good starting points for particular topics.

Debt Cancellation

http://www.africapolicy.org/action/debt.htm
Includes links to other sources, as well as to documents distributed on the topic through the Africa Policy Electronic Distribution List. Also the June 2001 Africa Action position paper on Africa's Debt.

International Trade Negotiations

http://www.twnside.org.sg
The Third World Network website has the most comprehensive and recent information available on the positions presented by African and other developing countries in World Trade Organization negotiations.

http://www.ictsd.org/weekly
BRIDGES Weekly Trade News Digest, from the Internatonal Centre for Sustainable Trade and Development, has regular summaries of the state of trade negotiations.

http://www.africapolicy.org/action/access.htm
Includes links to other sources, as well as to documents distributed on the topic through the Africa Policy Electronic Distribution List.

Official Development Assistance

http://www.africapolicy.org/docs01/ldc0105.htm
Includes several recent documents from the May 2001 Brussels conference on Least Developed Countries, and other references.

http://www1.oecd.org/media/release/ODA_april01.pdf Latest official statistics from the Development Assistance Committee of the OECD

http://www.devinit.org/realityofaid
Reports from the Reality of Aid project, with critical reviews from Northern and Southern non-governmental organizations.

http://www.usaid.gov/regions/afr/
The Africa page of the official site of the U.S. Agency for International Development.

U.S./Africa Trade Information

http://www.agoa.gov
Site dedicated to the African Growth and Opportunity Act. Has detailed information useful to businesses, as well as links to statistics and reports from the US Trade Representative's office and other agencies. In addition to the profile excerpted below, the latest trade statistics (through June 2001) are available at: http://www.agoa.gov/Resources/0601trst.pdf

http://www.africacncl.org
The Corporate Council on Africa, which is hosting a U.S-Africa Business Summit in Philadephia on October 30 - November 2.

http://reportweb.usitc.gov/africa
Links to most recent statistics, including query for detailed country-level information.

U.S.-AFRICAN TRADE PROFILE

Prepared by: G. Feldman, Department of Commerce, International Trade Administration, Office of Africa

March 2001

[brief excerpts only; for full text see
http://www.agoa.gov/Resources/TRDPROFL.01.pdf]

Two-way trade between the United States and Sub- Saharan Africa recovered strongly in 2000 from a lackluster performance in 1999, propelled by surging prices for imported crude oil and modest increases in U.S. exports to South Africa and Nigeria. Total trade (imports plus exports) soared 50%, to $29.4 billion.

U.S. exports to Africa grew 6.4% to $5.9 billion, although sales did not recover all the ground lost in 1999 from the record 1998 total. The increase was led by sales of aircraft to South Africa and Kenya, and oil field equipment to Nigeria.
U.S. imports from Africa surged by two-thirds to nearly $23.5 billion, due to soaring prices for crude oil.

Total trade had decreased narrowly in 1999, as a dramatic fall in U.S. exports was offset by higher U.S. imports caused by rising oil prices. Average crude prices began to climb in March 1999, and escalated nearly 150% by year-end 2000.

The U.S. merchandise trade deficit with Sub-Saharan Africa doubled in 2000, to $17.6 billion.

The cumulative imbalance over the last five years is nearly $52 billion in Africa's favor, but the associated transfer of financial resources benefits only a handful of African countries which supply substantial amounts of crude oil or strategic minerals to the United States.

Nigeria, Angola, Gabon, and South Africa accounted for nearly 94% of the U.S. trade deficit with Sub-Saharan Africa in 2000. The first three were major oil suppliers, while South Africa provided platinum and diamonds.
As trade increases between Africa and the United States it also grows more concentrated, with a small number of African countries accounting for a greater share of the total for both imports and exports.

Africa's Global Trade. Sub-Saharan Africa's total imports declined 7.5% in 1999 (the latest year available), to $77.2 billion from $83.5 billion in 1998. The contraction was due in large measure to the delayed impact of the financial crisis which gripped Asia and other emerging markets in 1997-98. The crisis exerted downward pressure on Africa's terms of trade, as world prices fell for most of Africa's export commodities.

Sub-Saharan Africa's share of world trade continues to decline, increasing Africa's marginalization from the global economy and excluding the region from growing world prosperity. In the last two decades, the volume of world trade has tripled while Sub-Saharan Africa's trade has grown less than 10%. As a result, Africa's share of global trade has fallen from just under 4% to less than 1.5%.

The U.S. share of Africa's total import market was 7.3% in 1999, down from 8% in 1998 due to appreciation of the dollar on foreign exchange markets. The dollar appreciated nearly 5% against the euro in 1999, while the United States slipped from second place to third among Africa's industrial country suppliers behind France with a 9.7% share and Germany with 7.6%. EU suppliers combined enjoyed a 38.6% market share in 1999, virtually unchanged from 39% in 1998. The dollar appreciated still faster in 2000, gaining a further 20% in value against the euro. The trend could have negative implications for U.S.-African trade in years to come.

Sub-Saharan Africa accounts for less than 1% of U.S. merchandise exports, and less than 2% of U.S. merchandise imports. In comparison, the region accounts for 3.6% of global exports and 3.7% of total imports for the European Union (EU). However, the United States is Africa's largest single market, purchasing 19% of the region's exports in 1999. The United Kingdom was second at 6.8%, and France third at 6.4%. The EU combined absorbed 40% of SubSaharan Africa's exports.

Impact of Asia Crisis. The Asian financial crisis was slower to affect Africa than most other regions, due to the undeveloped state of most African financial markets. However, the crisis eventually took a major toll on Africa’s terms of trade due to lower demand in Asia for Africa’s principal exports. Crude oil, gold, and copper were particularly hard hit, and only oil has recovered.

Average world crude oil prices fell from $23 to under $10 per barrel between 1997 and 1999, then climbed to nearly $34 during late 2000 before a small decline.
Meanwhile, gold prices which fell 24% after the onset of the Asia crisis in 1997, have continued to slide. In 2000 they averaged 27% below their pre-crisis levels, partly in response to large sales by the U.K. and Swiss national banks.
World copper prices were approximately 38% lower in 2000 than in 1995, although declining stockpiles caused a mild uptrend in prices near the end of the year.
According to IMF data, in late 2000 the metals commodity index was nearly 17% below the 1995 level, and the index for agricultural raw materials was down 28%.
The World Bank anticipates a decline in crude oil prices in 2000- 2001, and modest increases in prices for metals and agricultural raw materials. However, African exporters of coffee, tea, and cocoa would still face prices well below the levels of the pre- Asia crisis. ...

U.S. Merchandise Exports in 2000

U.S. merchandise exports to Sub- Saharan Africa were $5.9 billion in 2000, a 6.4% increase from the 1999 total. The expansion was led by sales of oil and gas field equipment to Nigeria, and aircraft to South Africa and Kenya. Exports had contracted sharply in 1999, due to dramatic declines in sales to the three largest U.S. markets in the region: South Africa, Nigeria, and Angola.

Sales of aircraft and oil field equipment tend to be volatile, suggesting that export growth may not be sustainable in the longer term.
In 1998, exports of aircraft and parts to South Africa and oil field equipment to Angola pushed U.S. exports to their highest total ever. A dramatic decline in these items in 1999 caused a large fall in total U.S. sales.

The 6.4% increase in 2000 shipments to Sub- Saharan Africa lagged behind gains in most other regions, with the exception of Eastern Europe where exports were flat and the Middle East which fell 9%. U.S. exports increased 21% in East Asia, 9.7% in the former Soviet republics, 7.4% in Central and South America, and 12.6% worldwide.

Despite the relatively slow growth, U.S. exports to Sub-Saharan Africa were 78% greater than those to the Newly Independent States of the former Soviet Union, and 86% greater than to Eastern Europe. U.S. exports to South Africa alone were a third greater than our sales to Russia, whose population is more than 3.5 times as large.

As U.S. exports to Sub-Saharan Africa grow, they become increasingly concentrated among a small number of countries. The top four markets--South Africa, Nigeria, Kenya, and Angolaaccounted for 72% of U.S. sales in 2000, with South Africa
accounting for 52%, Nigeria for 12%, Kenya for 4%, and Angola for 3.8%. In 1999, the top four markets represented less than twothirds of total exports. ...

U.S. Merchandise Imports in 2000

U.S. purchases from Sub- Saharan Africa totaled $23.5 billion in 2000, a 67% increase from the 1999 total, due to sharply higher prices for crude oil and a 40% increase in imports of platinum group metals.

Crude oil accounted for $16.3 billion, or 69% of U.S. imports from the region. In 1999, U.S. imports of crude oil from Sub- Saharan Africa were $8.1 billion, or 58% of total imports.

Although crude oil imports from Sub-Saharan Africa doubled in value terms in 2000, the increase in total barrel volume was only 16%. The average price per barrel escalated more than 73% during the year, to $28.79.
Sub-Saharan Africa supplied 18% of U.S. crude oil imports by value in 2000, up from 16% in 1999. In comparison, Persian Gulf suppliers provided 25% of U.S. imports, unchanged from 1999.
Nigeria, the number five U.S. supplier, provided $10 billion of crude oil to the United States, 11% of total imports. Angola was the eighth leading supplier, at $3.4 billion. Gabon ($2.1 billion), Congo-Brazzaville ($ 348 million), Congo-Kinshasa ($168 million), and Equatorial Guinea ($107 million) also ranked among the United States' top 25 suppliers of crude oil.

The second leading U.S. import, platinum group metals, constituted 6.5% of purchases. This category also includes iridium, palladium, and rhodium, among others. Partially refined petroleum products represented 4.1% of U.S. imports from the region.

After crude oil, platinum, and diamonds, imports of woven and knit apparel experienced the strongest expansion in 2000, growing 28%. The upsurge came before the apparel provisions of the African Growth and Opportunity Act (AGOA) were in force. Enacted in May 2000, AGOA provides for duty-free and quota-free importation to the United States of finished apparel from eligible African countries when they have met certain stipulated requirements. As more countries meet the requirements, the apparel sector could become an export growth engine in Africa.

U.S. imports from Africa remained highly concentrated among a small number of suppliers, even more so than U.S. exports. Four countries-- Nigeria, South Africa, Angola, and Gabon- accounted for more than 87% of U.S. purchases. Three were major crude oil suppliers, while South Africa was an important supplier of platinum, diamonds, and steel.

EU imports from Sub-Saharan Africa were only slightly more diversified. The six leading suppliers-- South Africa, Nigeria, Cote d'Ivoire, Cameroon, Angola, and Ghana-- accounted for 70% of EU imports from the region, with crude oil constituting nearly 19% of the total, diamonds 11%, and gold 6%.

Generalized System of Preferences. Duty-free importation of goods from Africa under the U.S. Generalized System of Preferences (GSP) jumped 54% in 2000, to $2.4 billion. However, the increase does not represent wider GSP utilization by African countries. Instead, the increase was dominated by oil shipments from Angola, CongoKinshasa, and Equatorial Guinea.

Angola moved to third place among GSP beneficiary countries worldwide from fifth place in 1999. South Africa was the eighth leading beneficiary due to a 30% jump in shipments of ferrochromium. For the second straight year, these two countries accounted for 80% of total GSP benefits in the Sub-Saharan region. Five countries accounted for more than 94% of GSP utilization in Africa.
Angola, Congo-Kinshasa, and Equatorial Guinea benefitted from a measure first implemented in 1997 that made imports of crude oil and partially refined oil products from least developed beneficiary countries GSP-eligible.
Leading GSP items from Africa in 1998 were: crude oil, partially refined petroleum products, ferro-chromium, and cane sugar.

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